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Gulf Keystone Petrol (GKP)

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Monday 24 January, 2022

Gulf Keystone Petrol

Operational & Corporate Update

RNS Number : 3041Z
Gulf Keystone Petroleum Ltd.
24 January 2022
 

 

 

24 January 2022

 

 

Gulf Keystone Petroleum Ltd. (LSE: GKP)

("Gulf Keystone", "GKP" or "the Company")

 

Operational & Corporate Update

 

Gulf Keystone, a leading independent operator and producer in the Kurdistan Region of Iraq, today provides an operational and corporate update.

 

Jon Harris, Gulf Keystone's Chief Executive Officer, said:

" We are pleased today to declare an additional interim dividend of $50 million, bringing distributions over the past eight months to $150 million in line with our commitment to balance investment in growth with returns to shareholders.

 

Since the beginning of 2022, gross production peaked at just over 50,000 bopd and has averaged c.46,800 bopd, versus the 2021 average of 43,440 bopd. However, the lower productivity of recently completed wells, SH-13 and SH-14, and temporarily curtailed production from SH-12, have resulted in a delay in gross production increasing to 55,000 bopd. 2022 gross average production is expected to be 44,000 to 50,000 bopd.

 

GKP's substantial production base at current oil prices continues to generate significant cash flow and value for Gulf Keystone's stakeholders. On approval of our recently submitted Field Development Plan, we are well positioned to achieve sustainable growth from the Shaikan Field, which has delivered close to 100 MMstb, and has 489 MMstb of estimated 2P gross reserves remaining."

 

 

Operational

 

·     Continued strong focus on safety in 2021 despite one previously reported lost time incident ("LTI"); currently no LTIs recorded for over 90 days 

·     Gross average production for 2021 of 43,440 bopd, at the upper end of guidance range; gross average production in 2022 year to date of c.46,800 bopd

· Drilling of SH-15 progressing well; continue to expect start-up in Q2 2022

· Due to well productivity, the increase in gross production towards 55,000 bopd has been delayed

SH-13 & SH-14

§ Following completion of the acid stimulation programme on SH-13, and the clean-up of SH-14, both wells were brought on stream in December 2021 and their productivity has been below  expectations

§ An acid stimulation programme for SH-14 is currently ongoing

SH-12

§ Following the early appearance of trace quantities of water, production from the well has been temporarily curtailed, in line with the Company's prudent reservoir management strategy . The Company is investigating options to maximise near-term production from the well

§ Water ingress is common in fractured carbonate reservoirs like the Shaikan Field. Gulf Keystone has historically experienced trace amounts of water in a few other wells and has been successfully optimising their production levels. The Company continues to expedite plans to add water handling to further optimise production

· The Company does not expect any material impact on reserves or medium-term production potential. Considering cumulative gross production of c.99 MMstb, 2P gross reserves are estimated to be 489 MMstb at 31 December 2021, based on the 2020 Competent Person's Report adjusted for 2021 production

 

Financial

 

· Following $100m of dividends distributed in 2021, Gulf Keystone is pleased to announce that the Board has approved the declaration of an additional interim dividend of $50 million, equivalent to 23.394 US cents per Common Share of the Company

· The interim dividend is expected to be paid on 25 February 2022, based on a record date of 11 February 2022. The Company will disclose the pounds sterling rate per share prior to the ex-dividend date of 10 February 2022

· $283.2 million ($221.7 million net to GKP) received from the Kurdistan Regional Government in 2021 for payments of crude oil sales and recovery of outstanding arrears, with an additional $89.0 million ($69.7 million net to GKP) received in January 2022 for the combined September 2021 and October 2021 crude oil sales and arrears payments

· The current outstanding arrears balance is $28.6 million net to GKP related to the January and February 2020 invoices

· Robust balance sheet, with a cash balance of $228 million as at 21 January 2022

 

Outlook

 

· The Company expects gross average production for 2022 of 44,000 to 50,000 bopd, reflecting the anticipated production contribution from SH-15 and benefits of well workover activities

· Gulf Keystone continues to engage with the Ministry of Natural Resources ("MNR") following the submission of a draft FDP in 2021. The Company will revert to the market at an appropriate time with details on the FDP and updated production guidance

· With continuing strong oil prices and cash flow generation, there may be opportunities to consider further distributions to shareholders and to optimise the capital structure

 

 

 

 

This announcement contains inside information for the purposes of the UK Market Abuse Regime.

 

Enquiries:

 

Gulf Keystone:

+44 (0) 20 7514 1400 

Aaron Clark, Head of Investor Relations

[email protected]

 

 

Celicourt Communications:

+ 44(0) 20 8434 2754

Mark Antelme

Jimmy Lea

[email protected]

 

 

or visit: www.gulfkeystone.com  

 

Notes to Editors:

 

Gulf Keystone Petroleum Ltd. (LSE: GKP) is a leading independent operator and producer in the Kurdistan Region of Iraq. Further information on Gulf Keystone is available on its website  www.gulfkeystone.com

 

Disclaimer

 

This announcement contains certain forward-looking statements that are subject to the risks and uncertainties associated with the oil & gas exploration and production business.  These statements are made by the Company and its Directors in good faith based on the information available to them up to the time of their approval of this announcement but such statements should be treated with caution due to inherent risks and uncertainties, including both economic and business factors and/or factors beyond the Company's control or within the Company's control where, for example, the Company decides on a change of plan or strategy.  This announcement has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed.  This announcement should not be relied on by any other party or for any other purpose.

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